If you’re planning on buying a home, chances are, you’ve already saved—or are currently saving—for a down payment. But the down payment isn’t the only cost you’ll need to cover when buying a home—and if you want to have enough cash to successfully purchase your home, you’ll need to budget for those additional costs as well.
But outside of the down payment, what, exactly, are the additional costs you’ll need to cover when buying a home?
Closing costs. There are costs associated with processing your mortgage and closing your home purchase. These are called “closing costs”—and, on average, they can range anywhere between 3 and 5 percent of the purchase price.
Inspections. Buying a home is one of the biggest purchases you’ll ever make, so you want to know any potential problems the house might have. Inspections will help you get a better idea of the condition of your home—and they’re a must if you want to avoid costly surprises in the future. Depending on the number of inspections you’ll need, plan to spend anywhere between $400 to a few thousand dollars.
Association fees. If you’re moving into a home that’s part of a homeowner’s or condominium association, you’ll typically have to pay association fees. Make sure you understand those fees before you buy the home—and that the fees fit in with your overall budget.